Insurance commissioner draws criticism from consumer groups

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The Associated Press

Insurance Commissioner Harry Low said Wednesday he’s working hard to restore public trust in his department after a scandal forced the resignation of former Commissioner Chuck Quackenbush.

But a consumer group said it was “deeply troubled” by Low’s decision to accept a court ruling supporting a Quackenbush policy that lets auto insurers set rates according to where motorists live.

Douglas Heller, a spokesman for the Foundation for Taxpayer and Consumer Rights, suggested that Low was more interested in avoiding a fight with insurers than enforcing the law.

“Not only does Commissioner Low seem unwilling to rock the boat, but the staff that is charting a course for him, we fear, are many of the same personalities (who) guided Mr. Quackenbush,” Heller told the Assembly Insurance Committee.

Low, a former state appeals court justice appointed after Quackenbush quit, said the law is murky enough to allow the regulations.

Low told the committee he is working to “change the culture of the department,” improve accountability and build stronger management. He said the department had not been managed effectively for more than 10 years.

To try to restore public trust, he has set up an ethics office and will start ethics train for department executives next month.

He is also working to reduce backlogs in the department’s investigations and licensing procedures and is setting up a process to ensure that money from enforcement settlements, such as the Northridge case, end up in the appropriate state fund.

Heller criticized Low’s recent decision to ask the state Supreme Court not to review an appeals court decision that said auto insurers could base their rates on where motorists live.

Consumer advocates said the ruling contradicted a voter-approved ballot initiative banning ZIP code-based auto insurance rates, which hurt good drivers who live in poorer areas.

Low said he agreed with the appeals court that the 1988 initiative, Proposition 103, was “not that clear” and that Quackenbush‘s regulations could stand.

Low said he has not decided whether to revise the regulations if they’re upheld by the courts.

Gov. Gray Davis appointed Low on July 31 to succeed Quackenbush.

Facing the possibility of impeachment, Quackenbush resigned last summer after he allowed six insurers accused of mishandling Northridge earthquake claims to avoid up to $3 billion in fines by donating to a special fund he set up.

The fund was supposed to pay for earthquake research and assist consumers, but none of the $6 million it spent went for either purpose. Much of the money was used for television announcements and other purposes that helped Quackenbush politically.

As of last month the department had received only four complaints from insurance policyholders under a new law that gives Northridge quake victims a year to refile rejected claims, Low said.

Sharon Arkin, a board member of Consumer Attorneys of California, suggested the small number of complaints was due in part to sternly worded letters from at least one insurer warning policyholders they could be forced to repay any money they received if the law is ruled unconstitutional.

Consumer Watchdog
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